Moody's warns Trump presidency could damage US and global economies

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Moody's warns Trump presidency could damage US and global economies

Postby Dr Frook » 23 Sep 2016, 00:42

this made me laugh

The election of Donald Trump as US president could have "far reaching" economic implications if his policies were implemented, according to the Moody's credit ratings agency.

Moody's Investor Services said Mr Trump's policies could have "credit effects" on some US sectors given that they include renegotiating trade agreements and introducing heavy tariffs.

However, the research also examined proposals from Democratic candidate Hilary Clinton which it said could send a mixed message to credit issuers around the world.

"While Clinton's proposals are more free trade oriented, and therefore less credit negative, they also suggest a willingness to review and revise free trade agreements that have terms perceived to be unfair in the US," Moody's said.

Moody's said both presidential candidates have proposed policies that in some cases "signal a break from the status quo" in an attempt to manage pressure on US manufacturing sector employment and wages.

Six weeks out from the November presidential election, Mr Trump's rhetoric has been perceived as protectionist, with a focus on the future of trade deals with China, Mexico and Canada.

Five key areas of policy examined

The study looked at the impact of Trump and Clinton policy proposals in five key areas, including international trade, financial regulation, tax policy and healthcare.

While Moody's stressed that the proposed policies might not be implemented at all, the agency warned about perceptions as campaign rhetoric intensifies.

"Policies that disrupt the flow of goods and services between the US and key trading partners, or might reduce market access and earnings, would be credit negative for industries including autos, oil and technology," Moody's cautioned.

Moody's said Donald Trump's call for a repeal of the Dodd-Frank oversight and a moratorium on all new regulations "would be seen as credit negative for banks".

However, it said Mrs Clinton's plan to tighten financial regulations to keep Wall Street banks under pressure "would raise complexity and the cost of regulatory compliance".

But Moody's added that tighter regulatory compliance - eight years after the Lehman Brothers meltdown - would strengthen bank capital and boost liquidity.

On the hot issue of immigration, the report said Mrs Clinton's proposal to grant more green cards to foreign students would be credit positive for technology, automotive and aerospace industries.

It said Mr Trump's proposals to cut incentives for companies to hire foreign workers would be credit negative.

Global central banks watch US election closely

Central banks around the world are watching the presidential election closely given Mr Trump's elevation as a potential risk along with Britain's decision to leave the European Union and ongoing concerns about China's economy.

Yesterday, the newly-appointed governor of the Reserve Bank, Dr Philip Lowe, said Australia's central bank was on alert for a possible Trump election.

"We don't have a particular contingency plan for that event, but we would be watching what's happening in the markets and we have the capability to respond if there was an adverse response," Dr Lowe to a House Economics Committee.

"If there was a president Trump ... we would all be watching and looking at how things evolve."
The BUGBLATTER BEAST HAS SPOKEN, ALL HAIL THE BLATTERER!
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